Vessel Seized in UAE Waters

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Crude oil prices were treading water in early-morning trading on Thursday despite ongoing tensions in the Persian Gulf. OPEC, meanwhile, is concerned about inflation.

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Seized Vessel Headed for Iranian Waters

Global crude oil prices were treading water on Thursday, though tensions remain high after a ship was seized in the Emirati waters of the Persian Gulf. Industrial Info Resources data show $187.2 billion of active oil and gas production projects across the Middle East in addition to $123 billion worth of refining projects.

The price for Brent crude oil, the global benchmark, was trading at around $105 per barrel before the opening bell on Thursday, unchanged from the prior close. That came even as the United Kingdom Maritime Operations Center (UKMTO) reported that a vessel was seized northwest of Fujairah and headed for Iranian territorial waters.

Industrial Info Resources has followed events daily since the conflict began in late February with joint U.S.-Israeli airstrikes on Iran. In March, the Fujairah Refinery Company closed its Fujairah Refinery, sidelining two distillation units that combine for 85,000 barrels per day (bpd).

April efforts to reopen the Strait of Hormuz have fizzled out, though some vessels are making it through. Japan's prime minister on Thursday had reached out directly to Tehran to secure safe passage for a ship managed by Japanese refining group Eneos.

Still, a significant portion of the maritime oil and gas trade remains stuck in the Persian Gulf. The U.S. Energy Information Administration (EIA) found total crude oil deliveries through the Strait dropped 30% from the fourth quarter to average 15.7 million bpd.

Deliveries of liquefied natural gas (LNG), meanwhile, were down 7% over the three-month period ending March 31, relative to the fourth quarter. QatarEnergy, one of the world leaders in LNG, halted production at its Ras Laffan and Mesaieed industrial complexes because of conflict.

Industrial Info has a running list of facilities directly or indirectly impacted by the war. With feedstock limited, plants as far away as Japan are under pressure.

OPEC Lowers Demand, Frets over Inflation

On Wednesday, economists at the Organization of the Petroleum Exporting Countries (OPEC) lowered their forecast for global oil demand growth from 1.38 million bpd in its April forecast to 1.17 million bpd. Further demand destruction could come from the inflationary pressures from the war.

"Most inflationary trends up to April were on an upward trajectory, being impacted by the consequences of rising commodity prices due to geopolitical tensions," OPEC economists wrote.

The United Arab Emirates left OPEC during the height of the conflict, raising questions about how the group will be able to address the ongoing energy crisis, a crisis the International Energy Agency said this week was unprecedented.

In the U.S. economy, the world's largest, consumer-level inflation to April was the highest since former President Joe Biden's tenure. On Thursday, the Bureau of Labor Statistics (BLS) reported that U.S. import prices surged 1.9% month-on-month to April, following a 0.9% increase to March.

Year-on-year to April, the fuels component of import prices jumped 20%. Prices at the wholesale level, meanwhile, advanced in April to their highest level since March 2022 and much of that was attributed to the increase in commodity prices, particularly fuels.

"There is no getting away from it, this war is starting to bite and has come home to haunt the great American consumer," wrote John Evens, an analyst at London oil broker PVM, in a Thursday newsletter.

By the Numbers

• 1.9% increase in U.S. import prices to April
• 20% increase in the fuel component of the index

Key Takeaways

• Traffic remains stressful in the Persian Gulf
• OPEC sees a demand hit from higher prices

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).